Bitcoin’s price finished its consolidation phase closing below $18,300 but will traders buy when the price is low?
After spending the last few days trading in an adjustment range, the price of Bitcoin (BTC) fell from its flag structure and closed below the 20-day moving average ($18,600).
Since reaching $19,888, several analysts warned that Bitcoin’s price was at risk of a sharp decline if it failed to secure a daily close above $19,500 or at least maintain the $19,000 support.
During Bitcoin’s most recent upswings, the price has remained above 20-MA, so a daily close below this measure could be a sign that a short-term reversal is in order. In this case, it also appears that the bulls have not yet bought the current drop.
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As the price dropped and approached the daily close, cryptanalyst Alex Saunders said, “Unless the $18,700 is held, the downward triangle will probably take us further down in the short term.
On the other hand, Cointelegraph analyst Micheal van de Poppe tweeted that despite the fall in Bitcoin’s price:
“It’s still in the range, but the more often the support is tested, the weaker it becomes. Volatility is likely to be between $18,500 and $19,500.
Van de Poppe further explained that “the BTC price level below $20,000 has been accompanied by a decrease in volatility and volume, making it increasingly difficult to predict the direction of the next move.
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Now that BTC seems to be trading in a downward triangle, traders will look at the $18,013 to see if the price can form a double bottom at the triangle’s support. Below this level, the visible range of the volume profile and the structure of the market suggest that there is also support at $17,800.
The RSI on the 4-hour chart is also entering oversold territory, which means that an oversold bounce could occur, but this move will require significant buying volume to push the price back to the 20-MA level where resistance is likely to occur.
A bullish turn of events would imply that BTC would do the double bottom mentioned above, and then turn the 20-MA and the $19,000 level into a support level at least at the 4-hour close.
On the other hand, if the $17,800 doesn’t hold as support, the Bitcoin price could fall to $17,200 and then to $16,400, which is close to the 23.6% Fibonacci retracement.
In a previously published analysis, Micheal van de Poppe also pointed out a large gap in WEC futures from $18,275 to $16,995.
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According to Van de Poppe:
“Generally, 95% of GCE gaps are filled, which increases the likelihood that the price will fall back to these levels in the short term.
This suggests that if the levels mentioned above are not maintained as support, the probability increases that the Bitcoin price will snatch liquidity below and return to the $17,000 level.